Further investigation is required in to the appropriate forms and licensing agreements required for importation, sale and distribution of this product within South Australia. At this stage, small amounts of investigation have shown that there are very few limiting rules and regulations.
2.5 Product Liability Considerations
Liability of this product is in the medium to low risk category. The potential obvious dangers revolve around the laser. When lasers are pointed directly in to someone’s eye it can cause potentially permanent damage. This risk, however, can be severely reduced by using low intensity laser pointers, as commonly found in most modern day presentation laser pointers. It is assumed that since it is a presentation tool, the presenter will be standing fewer that 6-7 meters away from the object they wish to point at, meaning that low intensity lasers can easily be implemented without compromising product quality.
The only other possible design risk associated with the WhitePointer is related to the refillable whiteboard marker. The whiteboard marker ink is not safe to consume and, during the refilling process if someone were to accidentally consume some, the consequences could be severe. This, however, cannot be avoided, meaning safety warnings may be required when selling the refill inks.
2.6 Future Spin-Off
The potential for product spin-offs is enormous. In addition to the idea mentioned earlier about the possibility of making all components attachable/detachable, there is a large selection of additional components that could be incorporated in to the designs to increase their areas of use. For instance, the clicker could use ‘Bluetooth’ as its means of transmitting signal, meaning it could wirelessly control iPods, cell phones and even cd players. It could incorporate a volume button that would allow you to adjust the volume of video presentations, and could even incorporate a ball that could be spun to control a mouse on the screen. The product could, as a result, move in to the universal remote industry and provide a very different alternative to the ones currently on the market.
2.7 Production
Production would likely be performed throughout several factories. Having each component produced within its own factory then shipped to an assembly factory may prove costly, however, would ensure the quality of the product and make each factory accountable for their own section of the design. In addition, this method of production will help protect the inner circuitry of the product and help in protecting the design.
3. Target Market3.1 Market Size, Location and Growth Trend
Due to the nature of the product being extremely mobile, the market includes people in any setting where they give any sort of presentations. This would include lecturers and teachers in the educational department, presenters in the business environment, and speakers attending events such as conferences, conventions, and any other type of speaking event.
To identify the location of the market, we need to know where potential customers/users are geographically located. The location of the market within in South Australia is located mainly in the CBD and along the coastline. To evaluate whether such a market exists in other major cities in Australia and major cities in other countries, similar correlation of data could be used, though more extensive market research would be required
Similar distributions occur for other professionals that are in our market. This means that the market is located in major metropolitan area, especially in the central business district as well as beach areas.
Below are is a table of professionals within Australia in each industry where potential customers lie, and using the percentages it is possible to estimate the size of the market in Adelaide.
This means that given the population of South Australia is around 1.3 million; we have a local market size of 18% of that number, which is roughly around 240,000 professionals. This is quite a large market considering the estimated selling price and revenue per sale.
As the trend in the corporate and university settings is to upgrade the presentation experience, many lecture halls at universities and conference rooms in offices are increasingly equipped with whiteboards and projectors. This is apparent by seeing the increasingly large number of media companies producing newer models of projector and projector screens, so using the sales of these complementary products, we can be confident that the market for the presenter tools has the potential to grow.
3.2 Market Structure and Access
The market is not really segmented in a clear-cut way due to differing preferences of individual customers within any categories (by profession, by industry, or by country). Also, production and delivery of presenter tools in this market can vary from a business manufacturing and selling the product themselves to sourcing for suppliers.
For the WhitePointer, the most likely access point is to be a retailer. We will source out a manufacturer to make the product and use a warehouse to store it. We will interface with the customers directly through an office/shop.
3.3 Competitor AnalysisThe major competition that will be faced by the launching of this product is very large and varied. As the WhitePointer is a fusion of existing technology and tools rather than a completely new invention, existing products need to be assessed to see whether this new presenter’s tool can successfully enter and compete against the products that are already in the market.
Below are popular items currently used in presentations, and will serve as examples of the types of tools that will compete with the WhitePointer.
Kensington Wireless Presenter: a device that allows wireless control of computer presentation and also comes with a laser pointer. Sale price is $60 USD.
AusPen: a white board marker that is refillable, which is one of the few innovative redesign of the traditional disposable marker. Their product differentiation is fully emphasised on the ‘sin’ of normal white board markers in schools, which is also their target market. Sale price is $10 per marker (including refill).
Generic brand white board markers: Most shops often sell these at $1 each or less. Quality is lower than ones made by stationary specialists but the price is the lowest in the market for its function.
Below is a table highlighting attributes of the types of products within the market compared to the WhitePointer. This also indicates where it stands at the moment compared to the rest of the market.
It will be hard for competitors to copy the WhitePointer due to its design, which would require the expertise of an engineer. Also to find manufacturers able to produce such a product would usually require special training and preparation of machinery that only few may be capable of.
Our presence in the market will probably be non-threatening at the beginning due to the conservativeness of the market (lecturers who are used to using disposable Whiteboards will find switching to Laser Pointers and refillable markers a hassle). This is to be expected as our product is the first of its kind, and we are trying to change the market direction rather than fill in the gaps.
3.4 Customers AnalysisThe customers are generally not the users, which in this case is the presenter/lecturer, but the institutions, companies or organisations that order the equipment/tools that the presenter is a part of. For example, if the customer was the University of Adelaide, the course lecturer or tutor would then be the user.
The degree of influence that the presenter has on the choice of presentation tool is generally quite high because it is ultimately whether the tool is convenient or preferable to the presenter.
At this point we have not yet communicated with any customers or users of presenter tools, but to find out the motivations and reasons behind their choices in presentation tools, we could conduct simple surveys that are circulated in the major segments of the market, namely the universities and companies.
Another way to discover where, when and how do customers choose or buy in this market is to observe sales and positioning of existing businesses that sell other alternative products in the market (such as Office Works, Harvey Norman, Cheap shops). The quantity of sales and location of their retail outlets are a result of their own research of where they believe they can get the most customers, which saves us having to research such facts.
Below are the benefits that the WhitePointer will present to customers.
3.5 Sales Forecast
Factors that would impact the sales and operation of the WhitePointer include:
- How conservative each segment of the market is.
- The degree of satisfaction users feel with existing options.
- The benefits customers would gain from switching their usual options to using the WhitePointer.
- The general awareness of the market to the entry of the WhitePointer.
- Initial price, bulk price, delivery method and ordering options.
- The marketing strategy behind the WhitePointer.
The largest part of the market would be the universities as they guarantee the need for lectures and presentations on a regular basis. This would mean that sales would increase in the weeks leading up to each academic semester or trimester, or even terms if schools are included in this market subdivision.
Here is our sales forecast for each of the next three years:
First Year:
- Given that promotion to raise awareness and interest of the WhitePointer is successful, the first year of sales should be good, and breaking even within this first year isn’t impossible. The reason for this is that universities and businesses as a customer often seek alternatives, so they would be willing to ‘try’ new products, even if lecturers/presenters themselves weren’t interested.
Second Year:
- Given that the features and benefits are successfully delivered to customers, they may refer other businesses/universities/organisations to the use of the WhitePointer.
Third Year:
- The sale of would ultimately decrease by the third year, by which it has reached its market potential, estimated at 25% of the market that uses presenter tools (this will inevitably be shared with any similar developed products which may exist now or in the near future). The main reason is that the nature of the product allows it to be long-lasting and not require replacement or re-purchase if the user takes good care of it, therefore the total demand will reduce after customers’ orders. The product would’ve matured by the fourth year and it would be time to move onto another product or pass the business along.
4. Financial Plan
4.1 Sales Projections
Explanations and Assumptions
- Market for wholesale trade in Australia of ICT products = $50,902,800.00
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Market for wholesale of wireless presenters = $1,068,958.80 → which is 2.1 % of ICT products (refer to below)
- Number of wireless presenters sold = 15,270
- Sale price per item = $70.00
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We found Logitech, which is a lead international seller of computer peripherals that provided the financial information we needed as they had sales figures on their products. Obviously, Logitech has significantly larger operations than we would, so we compared their sales of ‘pointers’ to sales of computer peripherals in Australia and using both sets of information estimated that 2.1% of all computer peripheral sales were in fact sales of ‘wireless presentation tools’.
- We then prepared estimated growth figures from three perspectives;
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Pessimistic: Initial entry will see the WhitePointer cover 3% of the market; this will grow by 35% in the following year and by the third year will stabilise, growing 45% from the previous year.
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Expected: This is what we have based the subsequent figures on. Initial entry will see the WhitePointer cover 5% of the market; this will grow by 50% in the following year and will stabilise in the third year, growing 65%.
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Optimistic: Initial entry will see the WhitePointer cover 7% of the market; this will grow by 65% in the following year and will stabilise in the third year, growing 80%.
- The optimistic growth figures are very similar to those of their market leader, Logitech’s growth figures from entry i.e. 2006 – 2008. However, given the scale at which Logitech’s sales are, I decreased the growth figures slightly to give a more realistic figure.
- We used Logitech’s growth pattern of its wireless presenter as a guide but lowered the growth a little due to the different markets in which the firms operate:
4.2 Cost Estimates
There will be no direct labour costs involved in our business because manufacturing will be outsourced.
4.3 Marketing Expenses*Refer to explanations and assumptions below.
Explanations and Assumptions
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A team member has the qualifications & expertise to conduct these services. Each team member has his/her expertise in an area that is required by this business. No external employment is necessary. Each member will contribute 5 hours per week to any and all areas of operations. Specifically the area of his/her discipline. Most operations will be done via the internet/phone/fax. That’s 10 hours per week at a rate of $15 per hour, 52 weeks of the year.
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Website Domain costs $99 for two years.
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An advertisement in Yellow pages cost $90 per year.
- 1,000 business cards for a price of $99, and it is expected that after the first 2 years, we will have a relationship with the client base and not need to order any more business cards.
4.4 Operating Expenses
Explanations and Assumptions
- The operations will take place on a part-time basis, primarily on-line.
- A team member has the qualifications & expertise to conduct the accounting aspects of the business.
- Interest calculated under Bank SA Business loan Credit Card loan of $20,000.00 with interest of 17.15% p.a.
- Bank Charges will be $10 per month of under $5000. Initially the account will be (most if not) fully withdrawn. In the second and third years it is expected that the Business Bank Account will maintain a level of at least $5,000 to avoid this fee. It is also expected that in the third year, the Business Credit Card will be paid off and the partnership will start using its retained earnings for most of its business operations.
- Business operations do not require many utility expenses; most of the equipment necessary is already obtained, except a phone line.
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Line Rental: Telstra HomeLine Reach costing $49.95 per month
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Following Logitech, we have estimated that the cost of goods sold (purchases made to suppliers) represent 68% of sales. This will reduce slightly the following year as we develop a relationship with the supplier to 60% as sales increase (we will be able to buy more inventory at a discounted rate).
4.5 The Profit and Loss Statement
*Refer to explanations and assumptions below.
Explanations and Assumptions
- Purchases include payment to suppliers for inventory.
- As expected, first year profit will be minimal. However it's the growth in sales and net profit that are most important.
- These figures do increase quite rapidly within the first three years which is a good indicator of business success.
4.6 Break Even Analysis
*Refer to explanations and assumptions below.
Explanations and Assumptions
- Initial entry involves sponsoring an event such as a Careers Fair, in which we can distribute our product among major corporations to give potential customers an idea of our product.
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TPG charges for Domain (Website).
- The break-even analysis calculates the sales in units and dollars at which the return (profit made) will be zero. Any sales below this will mean the business is operating at a loss. Essentially, the business need to make sales equal or above this amount to remain viable.
- Year 1 sales are only $141 above the break even point. This is not desirable as the aim is to make a profit, more significant that not instead of just breaking-even.
- However it's important to remember most of the fixed costs incurred in this year are ‘start up costs’ that will not be incurred in following years. This is show in the second and third years as the break even point is 482 units ($33,721.00) and 487 units ($34,071.00) respectively. It is essential that the business remains above this amount and refers back to it in order to try and improve the figure, i.e. lower the amount by minimising and manage fixed and variable costs (variable expenses are easier to change).
5. Further Factors to Consider
5.1 Aspects of the Proposed Venture
There are several positive and strong aspects relating to the proposed new venture, the WhitePointer. It is a new development in a large market, meaning there is currently several large companies that may want to either co-produce the product, or even provide an appropriate exit strategy once the product has been fully developed.
There is also a promise of continued business within the industry. Once a customer buys the WhitePointer, they must come back to the business to purchase the refills for their marker. And being that this whiteboard marker promotes refills and reducing waste, it would also receive goodwill from customers regarding the support of reducing environmental impacts.
Finally, the market for this product is almost endless. It is a worldwide market and the product can be applied to almost every business. As a result, the potential for growth is huge.
Some of the negatives regarding this venture include the ease by which other companies may copy the idea. This has been discussed within the product/service section and is very hard to control in this instance. It may also be quite hard to infiltrate the market as it is such a stable market currently. The new item may be seen as over complex and may scare customers away. It is also a solution to a problem customers currently don’t know they have. The market must be educated in a better way to do something then shown how the WhitePointer works to fix that problem.
5.2 Capital
Very minimal capital is needed for this venture. Some materials needed to create the products and then some stock on hand to cope with demand increases and drops may be required. The remaining capital items can all be leased or contracted out to external resources.
5.3 Entrepreneurial Team
The entrepreneurial team consists currently of four team members. Marius is in charge of the marketing and sales, Emily is in charge of the finance, Harrison is in charge of the engineering and Joseph is the team leader. With these three key areas covered and an overseeing member assisting with team integration the venture should be well supported.
5.4 Intellectual Property Rights
The intellectual property rights have been discussed within the product/service section. This is a very difficult and complex section for this product as it relies upon common knowledge technology and brings very few new items to the table that can be protected via patents.
5.5 Potential Aspects
The potential for licensing this product or finding a co-developer is huge. Since it looks at entering a market scattered with large companies, there is a very real possibility of one of these companies either choosing to co-produce the product or sell the product through a license to them as their own product. Such companies that could be considered are Bic, Logitech and Apple.
5.6 Business Plan
After review of the above factors, it is recommended that further research is required before a business plan be written. The research required involves customer surveys and possible production pricing and costs vs. profit analysis.
6. Conclusion
The WhitePointer is a very good business concept with a great amount of potential to succeed when entering the market. In order to successfully penetrate and establish its position within the market, the WhitePointer needs to focus on enhancing its strengths, creating a level of ‘newness’, and providing the potential customers with what they need. It also requires further investigation into the financial side of the plan. Rough estimates for the cost of goods to be leased and potential pricing schemes would need to be obtained and developed so an appropriate business plan can be created. Then public surveys would be required to determine the possible demand in local areas and where/when the busses will need to operate. Once this is done it will be more obvious how financially viable the business is.
List of Appendices
Appendix 1 – WhitePointer Design
Appendix 2 – Geographic Location of Target Market (South Australia)
Appendix 3 – Competitors
Appendix 1 – WhitePointer Design
Appendix 2 – Geographic Location of Target Market (South Australia)
Professional Industry (Education, Business, Finance, Management, Corporate) density within South Australia (bellow)
Source: Mosaic Australia – Mosaic Multimedia 2008
Appendix 3 – Competitors
http://www.tmarque.com.au/tm/search/
ABS, Labour Force, Employed persons by State and Industry (6291.0.55.003, Table 05) May 2008
http://us.kensington.com/html/11190.html
http://auspenmarkers.com/
Price catalogue from Cheap as Chips and The Reject Shop
ABS, AUS STATS – Information and Communication Technology 2008
Quarterly Product Family History 2008, Logitech – http://ir.logitech.com/financialhistoryQtr.cfm?pagesect=Prod&ProdYear=2008
http://www.business.gov.au/Business+Entry+Point/
Domain Name Hosting 2009 – http://www.tpg.com.au/products_services/domain_hosting.php?fc=b
J Jaffa, Yellow Pages – What does it cost?
Home Phones & Plans 2009 for Telstra –www.telstra.com.au/homephone/
Quarterly Product Family History 2008, Logitech – www.ir.logitech.com/financialhistory
Home Phones & Plans 2009 for Telstra –www.telstra.com.au/homephone/plans/compare_and_order_a_plan.html
www.mosaicaustralia.com.au